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TMI Blog2019 (11) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenses incurred in earning income which does not form part of total income under Chapter III of the Income-Tax Act, 1961 ["the Act"] by invoking the provisions of section 14A of the Act. 3. The assessee is a company engaged in the business of financing as well as investment in shares and securities. For the AY 2013-14, the assessee filed a return of income on 21.9.2013 declaring income of Rs. 3,75,18,920. 4. In arriving at the total income, the assessee had made a disallowance of Rs. 24,88,20,868 u/s. 14A of the Act. The AO after making a reference to the provisions of section 14A of the Act and Rule 8D of the Income-tax Rules, worked out the disallowance u/s. 14A of the Act as follows:- 4.6 The disallowance u/s. 14A r.w.r. 8D is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the AO and the disallowance made by the assessee in the computation of income viz., a sum of Rs. 2,21,67,169 was added to the total income of the assessee by way of disallowance u/s.14A of the Act. On appeal by the assessee, the CIT(Appeals) restricted the addition u/s. 14A of the Act of Rs. 24,90,96,229 as against the disallowance u/s. 14A made by the AO of Rs. 27,09,88,037. Still aggrieved by the order of CIT(Appeals), the assessee has preferred the present appeal before the Tribunal. Though the assessee has raised several grounds of appeal before the Tribunal, at the time of hearing, the ld. counsel for the assessee restricted his argument for a limited relief of restricting the disallowance u/s. 14A of the Act to the extent of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Income-tax Act, 1961, read with rule 8D of the Income-tax Rules, 1962 - Expenditure incurred in relation to income not included in total income (Rule 8D) - Assessment year 2009-10 - Whether upper disallowance cannot exceed exempt income of relevant year - Held, yes - Whether where for year in question, finding of fact was that assessee had not earned any tax free income, corresponding expenditure could not be worked out for disallowance - Held, yes - Whether for computing disallowance under clause (ii) of rule 8D(2), numeral B in clause (ii) refers only to average value of entire investment that does not form part of total income - Held, yes (paras 25 and 26) (in favour of assessee)." Further co-ordinate bench decision in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch of Tribunal in the case of ACIT vs. Vireet investment Pvt. Ltd. & anr (165 ITD 27) (SB), the contention of the assessee is accepted. Accordingly, we restore the issue back to the file of the AO for disallowance u/s 14A by restricting the amount of disallowance to the lower of exempt income or amount arrived at by prescribed formula under rule 8D clause (iii) by taking into only those investments which yielded exempt income." By applying the ratio of the above decisions, we restore the disputed issue to the file of the AO for limited purpose to restrict the disallowance u/s 14A to the extent of exempt income and allow the grounds of appeal are allowed for statistical purposes." 6. We have perused the aforesaid decision of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X
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